Reference no: EM132543259
HASF & Company Ltd. Planning its cash needs for the month October November and December. The following information has been assembled to assist in preparing a cash budget for these month.
August:
Sales =20,000
Materials= 10,200
Wages= 3,800
Overheads= 1,900
September:
Sales= 21,000
Materials= 10,000
Wages= 3,800
Overheads= 2,100
October:
Sales= 23,000
Materials= 9,800
Wages=4,000
Overheads= 2,300
November:
Sales= 25,000
Materials=10,000
Wages=4,200
Overheads= 2,400
December:
Sales= 30,000
Materials=10,800
Wages=4,500
Overheads= 2,500
a) 10% sales are on cash basis, 50% of the credit sales are collected next month and the balance in the following month:
Creditors Materials after 2 months
Wages 40% in the same month & 60% in next month
Overheads ½ in same month and ½ in next month
b) Cash balance on 1st October, 2019 is expected to be Rs. 25,000.
c) A machinery will be installed in August, 2019 at a cost of Rs. 100,000. The monthly installment of Rs. 5,000 is payable from October onwards.
d) Dividend on preference share capital of Rs. 30,000 will be paid on 1st December, 2019.
e) Advance to be received for sale of vehicle Rs. 20,000 in December.
f) Income-tax (advance) to be paid in December Rs. 5,000.
g) Minimum Balance required Rs. 25,000.
Required
Question 1: A cash budget for the month of October November and December as well as in total for the quarter
Question 2: If the company needs a minimum cash balance of 25,000 to start each month can the loan be repaid?